Karl Rove-affiliated group also targeted by IRS?

May 21, 2013

Written by

Fredreka Schouten

USA TODAY

WASHINGTON — Crossroads GPS, a Republican group that was one of the biggest spenders in the 2012 elections, claims it also was singled out for extra scrutiny as part of the Internal Revenue Service's targeting of conservative organizations.

Crossroads GPS, founded with help from GOP strategist Karl Rove, applied for formal recognition as a tax-exempt group in September 2010 and has not received it, spokesman Jonathan Collegio said.

"From everything we know … Crossroads was one of the targeted groups," he said. He refused to discuss any specific actions or inquiries from the IRS. Crossroads spent at least $71 million to influence last year's presidential and congressional elections.

IRS officials did not immediately respond to a request for comment, but generally do not provide any information about groups with pending applications.

For campaign-finance watchdogs, groups like Crossroads GPS are poster children for the influential political groups they say have exploited weaknesses in tax and campaign-finance rules. Some of the biggest organizations active in elections operate under the section of the tax code designated for so-called "social-welfare" organizations. By doing so, they do not have to disclose their funders.

The IRS is under fire for inappropriately scrutinizing the applications of conservative groups, such as those with tea party in their names. Other criteria also included a group's focus on government spending or making "America a better place to live."

In all, nearly 300 groups were subjected to enhanced scrutiny, according to a Treasury Department inspector general's report. The report identified 96 groups as having "tea party," "patriots" or "9/12" in their names, but did not identify more than 200 others that auditors say faced additional questioning.

The agency's extra scrutiny of conservative groups started in March 2010, according to the inspector general.

Even without formal IRS recognition, groups can declare themselves as operating as a 501(c)(4) tax-exempt group and begin raising and spending money. But there are legal and financial benefits to formal recognition by the IRS.

Crossroads GPS is operating as a social-welfare group. It reported receiving more than $28 million from 32 unidentified donors in 2011, according to its most recent tax return. A single donor contributed $10 million.

Fred Wertheimer, president of the watchdog group Democracy 21, began raising objections with IRS about Crossroads GPS' tax status in October 2010 and has filed several complaints about the group and other organizations involved in politics. He wants the tax agency to bar Crossroads GPS from operating as a tax-exempt organization.

"They certainly should have been scrutinized by the IRS," he said. "And the IRS certainly should have acted to deny them 501(c)(4) status."